For decades, RadioShack has been one of America’s most enduring, recognisable and reputable electronics retailers. As of February 2015, however, it is looking increasingly likely that the firm will be filling for bankruptcy, with the Sprint mobile network showing interest in buying what remains after the insolvency event with focus on its property portfolio. Sprint itself is renowned for its investment experts, such as can be found on this Mukesh Valabhji Google profile, and so there is every possibility that this endeavour could prove lucrative for all involved. And yet, while RadioShack itself may be nearing the end of the road, it is hoped that with Sprint’s involvement that at least something of the former electronics giant will endure, although what that will be is pure speculation at this time.
Radioshack: An American Icon
There are few brands in America which can boast the same fame and iconic status of RadioShack. Formed in 1921 by brothers Milton and Theodore Deutschmann, the company was originally intended to provide electrical equipment for amateur radio and electronics enthusiasts. Beginning with just one humble storefront in Boston, by 1939 RadioShack began to move away from the amateur market towards providing quality electronics at an affordable price to the general population, who were now truly invested in the electronics revolution.
The next step in the company’s ascendancy was to produce its own products, which was a major milestone in its development as a recognisable brand. In the 1960s, after an initial mail-order catalogue business and through over-extending itself with nine retail properties, the company began to struggle financially.
In order to rectify its delicate financial situation, RadioShack was bought over by another popular company, Tandy, in 1962. Thus began the company’s true climb to the top, with new investment and expansion to countries such as Australia and the UK. Along with Tandy’s successful computer manufacturing business during the 70s and 80s, in 1970 the company procured Allied Radio, a similar business which in the end had to be sold off due to concerns that Tandy was monopolising the industry.
Throughout the 1980s and 90s, the company maintained its standing as a popular brand and producer of electronics goods; however, in 2004 concerns about RadioShack’s profits were raised and in 2005 it reported that its earnings had fallen by 62% in its first quarter.
In 2012, the company was given a credit rating of “junk status” by Moody’s Investors Service, heralding a chain of events which have led to this once mighty cornerstone of the American electronics industry being taken off of the stock exchange and in danger of bankruptcy.
In January, 2015, RadioShack instructed its employees to begin clearance sales to sell its remaining stock.
RadioShack: The Importance of Brand Recognition
What remains of RadioShack will be determined entirely by its debts and the insolvency procedure. That being said, the brand name alone still holds many fond memories for families and electronics consumers. This is an important asset which may be useful to a company wishing to purchase it. It is entirely possible, and plausible, that a business with the correct infrastructure could use RadioShack’s assets to great success, bolstering their own interests and turning a profit in the process.
Another asset which should not be overlooked is the large number of RadioShack retail properties which are currently owned by the company. These properties, many of which will be in prime locations, could be rented out as commercial retail or office space; they could also be used by a company’s existing brands to simply re-position their retail locations, gaining advantage over competitors due to the number of shops put in place and their locational desirability from a retail perspective.
There is of course the question of existing stock, but most of this will probably be cleared during a firesale. The main assets which businesses will be interested in are the RadioShack brand and the physical storefronts.
Sprint in Talks to Buy Assets
The Sprint Corporation has been part of the SoftBank Group since July 2013 and has established itself as a leading competitor as a mobile network provider. With a self-professed desire to meet the needs of its subscribers via mobile network coverage and the sale of a range of mobile devices to be used in tandem, the Sprint network is a brand with a strong reputation having been rated as the most improved company across 47 industries in the US by the American Customer Satisfaction Index, and being included on the DSJI (Dow Jones Sustainability Index) for North America for three years running.
It has been reported that Sprint are interested in securing at least 50% of RadioShack’s retail leases with a further suggestion that some stores might retain the RadioShack brand name in conjunction with Sprint. As a leading provider of mobile devices, alongside its network coverage, Sprint is perfectly situated to purchase RadioShack’s existing stores while combining both companies’ abilities to supply electronics goods to the general public.
It is hoped by some that the RadioShack brand will survive in one form or another, as it has been a company which generations of Americans have used for decades, and one which might just have some life left in it yet.